Episode 2
The Surprise
Two sellers, a busy lake, 180 ice creams sold. Do the arithmetic before you read on — the result contradicts the assumption almost everyone brings to this day.
The board agreed quickly, and the advice was sound: if ten hours on the shore sell 100 ice creams, twenty hours sell more. Mira needs help.
There were other routes. She could have raised the price. She could have tried to buy cheaper. She could have stayed at the table until dark. Each of those moves a different part of the same calculation, and none of them is obviously wrong. Mira picks the one that works fastest and hurts least: more hands.
She asks a classmate.
The negotiation
Mira offers commission: half the margin on every ice cream sold. Sell more, earn more. To Mira that is the obvious arrangement, because she only pays when something comes in.
The classmate says no. She wants €5 an hour — certain, predictable, the same whether the day goes well or badly.
By the lake that sounds like a detail. The two of them have just negotiated over two kinds of cost that behave in opposite ways.
One kind is Variable costs grow with every ice cream sold — the €0.50 buy-in per unit is the cleanest example. Double the quantity, and these costs double right along with it. full card like the €0.50 buy-in: they grow with every ice cream sold, and if she sells nothing they never happen at all.
The other is Fixed costs happen no matter how many ice creams get sold — the hourly wage is the story's example: ten hours at €5 is €50, whether the evening count reads 200 or 20. The cooler is borrowed and Mira pays no pitch fee — the wage stays the only fixed cost in this story. full card like the hourly wage: ten hours at €5 is €50, whether the evening count reads 200 or 20.
Commission would have split the risk. An hourly wage leaves all of it with Mira. The classmate chose certainty and, without anyone saying so out loud, left the entrepreneurial half of the day with her friend. That is not a bad deal — for the classmate. It is simply a different deal than it looks like.
She also has a good reason, even if she would never put it that way. She cannot judge how the day will go. She does not know the lake, she knows nothing about the demand, she has no say over the weather and none over how many people show up. When you cannot price a risk, you are better off selling it than carrying it. That is precisely what she does: she hands the risk to Mira and accepts that on a good day she will earn less than she might have.
Mira agrees. Her assumption is the one almost everybody has at this point: twice the sellers, twice the profit.
That is an assumption. It is not a calculation.
Day two
To Mira the day feels like the first one: sun, people along the shore. Both of them work ten hours at the table. By evening, 180 ice creams are sold.
180 instead of 100. Eighty more than the day before. Not double, but close — and a good result for a first day as a pair.
Before you read on, work it out yourself. You have everything you need.
- 180 ice creams at €1
- €0.50 buy-in per ice cream
- ten hours of wages at €5
The number
Revenue: €180. Cost of goods: €90. Wages: €50.
Profit: €40.
The day before, it was €50.
She sold eighty percent more ice cream and earned twenty percent less.
Measured against the goal it gets worse. After day one she was €450 short, which was nine days at €50. After day two she is €410 short, and at €40 a day that is eleven more. She brought in help to go faster and got slower.
In my trainings this is the moment the room goes quiet. Participants redo the arithmetic, because at first they don’t believe it. The arithmetic holds anyway, and that is the uncomfortable part.
The mechanism behind it does not stay by the lake. Revenue grows visibly, because everyone is watching it. Costs grow quietly alongside, because they sit in different rows. Somewhere between the two the ratio tips, and whoever watches only the top line finds out last.
Something else happened here too: Mira traded one kind of cost for another without noticing. As long as she sold alone, her costs only grew when revenue grew with them. From today, part of her cost runs on its own clock — ten hours of it, whether anyone is standing at the table or not.
Over to the board
In the obvious places, nothing changed. The price is the same, €1. The buy-in is the same, €0.50. The hours worked are the same. So the explanation, if there is one, has to sit somewhere else.
Mira now has two days, two sets of numbers, and a result that contradicts her assumption. What she does not have is an explanation.
More sold, less earned. What went wrong?
You can answer that question right now. Almost everyone can — something comes to mind before you have even finished reading the numbers.
Hold on to your answer. Episode 3 is not about whether it is right. It is about where you think you know it from.